What if we counted differently……

Saijel Kishan’s recent Bloomberg article, provocatively titled, How Wrong was Milton Friedman is intriguing on many levels. It summarizes the work of George Serafeim, an HBS professor who wants to change how we measure company success and failure. Specifically, he wants to reward and punish companies on the income statement based on ESG impacts. That is, he proposes to put a dollar value on diversity or lack thereof, on polluting or not, etc. And then have those companies report profit and loss after consideration of their social impact. It’s an ambitious plan, and some would say just a natural extension …

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NBN Interview with Vadim Shneyder: Russia’s Capitalist Realism

Vadim Shneyder’s new book, Russia’s Capitalist Realism: Tolstoy, Dostoevsky, and Chekhov (Northwestern, 2020) examines how the literary tradition that produced the great works of Leo Tolstoy, Fyodor Dostoevsky, and Anton Chekhov responded to the dangers and possibilities posed by Russia’s industrial revolution. During Russia’s first tumultuous transition to capitalism, social problems became issues of literary form for writers trying to make sense of economic change. The new environments created by industry, such as giant factories and mills, demanded some kind of response from writers but defied all existing forms of language. Prepare yourself for an innovative perspective on Anna Karenina, The Idiot and other 19th-century …

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At the intersection of the Random Book Project and our current predicament.

#5: Guido de Ruggiero, The History of European Liberalism (Boston: Beacon Press, 1961, reprint of OUP original from 1927). No price. How did I get it: Been carrying it around with me since graduate school. Why: Rereading this classic account of “the experiment” in classical liberalism, to remind me how we got here, and how easy it is/would be to foul it up, and end “the experiment.”  De Ruggiero’s work was published as a rebuff to the fascism which had taken over Italy at the time. Relevant conclusion: classical liberalism cannot be assumed. It has to be worked at by each …

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GM’s Alfred Sloane on dividends (1935).

Alfred Sloane was the legendary, long-time leader of General Motors. In 1935, he shared his views on GM’s dividend policy in the New York Times. The point is that the company that dominated an industry for over a half century felt completely comfortable paying robust dividends while investing in its business. Any answer from the Fab 15? (Google, Amazon, FB, etc)  Pdf of the column in the attachment, courtesy of the NYT. Sloan 1935

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The “non-cash” charge and the business investor.

An investment philosophy that considers stock market investing as simply another form of business investment will necessarily focus on the basics of business investing, such as cashflows. That is often at ends with how the stock market works. Case in point is the infamous “non-cash” charge……  Wall Street brokerages and too many investors are delighted to ignore non-cash charges because, well, they are non-cash.  It’s worth reminding investors what every business owner knows: that those non-cash impairments more often than not started out as cash outflows, usually for acquisitions. A non-cash impairment of goodwill or asset write down is the …

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NBN Interview with Jonathan Schneer: The Lockhart Plot

History in the making can be messy. As a tale told years later by historians, it is usually a clean narrative, with a beginning, a middle, and a mostly logical and foreordained end. Much of that messiness gets lost. Not in Jonathan Schneer’s new book, The Lockhart Plot: Love Betrayal, Assassination and Counter-Revolution in Lenin’s Russia (Oxford UP, 2020). Schneer’s recounts the story of a young British diplomat, Bruce Lockhart, sent to Soviet Russia soon after the October Revolution in 1917. Initially seeking some sort of accommodation with the Bolsheviks, Lockhart ends up plotting to overthrow the regime. The plot–set for …

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NBN Interview with JC de Swaan: Seeking Virtue in Finance

JC de Swaan does not shy from a challenge. In his new book, Seeking Virtue in Finance: Contributing to Society in a Conflicted Industry (Cambridge University Press, 2020), de Swaan, argues that it is possible to work in finance and not fall prey to the worst ethical ills of a profit maximizing industry. A lecturer at Princeton and partner in at Wall Street hedge fund, de Swaan spent years chronicling examples of virtuous behavior in finance. He distills his research into four “pillars” of ethical behavior for financial professionals. They include 1. Customers first, 2. Social wealth creation 3. Humanistic leadership  and 4. Engaged …

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Are vanishing dividends a good idea? Hardly.

Exercising business ownership through the stock market is hard enough. The pressure to be a stock speculator is overwhelming. And it just got a little harder. A Bloomberg Opinion column from October 20, entitled, “Those Vanishing Stock Dividends Should Stay That Way,” took up the case of a junk rated (BB), highly cyclical mining company that cancelled its miniscule dividend in March of this year. The piece trumpeted that the stock’s share price rallied sharply off the bottom of the market that month. The author wrote that “shareholders appeared to send the message that they would prefer [the company] put …

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A thoughtful dissent from the ruling investing orthodoxy…..

Aswath Damodaran’s recent Musing on Markets blogpost (from Sept 21) offers a thoughtful dissent from the ruling orthodoxy on ESG investing. He highlights how the current “hype” (his word) leaves critical analytical questions “unanswered or answered sloppily.” For example, he asks,  “Do companies perform better because they are socially conscious (good) companies, or do companies that are doing well find it easier to do good?” If the latter, “researchers will find that ESG and performance move together, but it is not ESG that is causing good performance, but good performance which is allowing companies to be socially good.” He points …

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